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Being a good leader means making good decisions, especially under duress. A new book looks at how neuroscience can help leaders make sound judgments by mapping patterns of mental activity: The Wise Advocate: The Inner Voice of Strategic Leadership.

It was written by Jeffrey Schwartz, research psychiatrist at UCLA School of Medicine; Art Kleiner, editor-in-chief of PwC’s strategy+business management magazine; and Josie Thomson, business coach, speaker and author. Schwartz and Kleiner joined the Knowledge@Wharton radio show on SiriusXM to talk about the research behind their book. (Listen to the podcast at the top of this page.)

An edited transcript of the conversation follows.

Knowledge@Wharton: Can you talk about how neuroscience is key to understanding so many things within our business culture?

Jeffrey Schwartz: That is very true, but there are limitations to how far you can get with just neuroscience. The advantage of neuroscience is that it gives a neutral platform that has a strong scientific grounding, a strong scientific validation to talk about the relationship between emotional life, emotional inner experiences, focusing of attention, and then what we call the executive brain, which is very related to executive function.

That’s the big word that neuroscience and business have in common — executive. What that means in both neuroscience and in business is planning ahead, keeping your focus of attention on goal-oriented plans and inhibiting responses, especially habitual responses that take you away from your long-term goals. That’s where neuroscience and business align.

Knowledge@Wharton: Companies are looking for every edge to improve their operations. Is this one of them?

Art Kleiner: Most companies are under unprecedented pressure. They’ve always been under unprecedented pressure, but it just keeps getting more complicated because life keeps getting more and more complicated, especially with the global environment.

There are two ways of reacting to that pressure, two ways of being a leader. You can be transactional: solve problems, get things done, please your boss, please your customers, make deals. You need to be that kind of leader.

But in a time of challenge, you need to find ways to move your organization past its threshold, past its limits, to do things that you and your colleagues couldn’t do before. We call that kind of leader a strategic leader because they’re looking at long-term goals. In order to be that kind of leader, you have to really think about the world around you, the people around you, and yourself in new ways.

Knowledge@Wharton: In the book, how do you tie neuroscience to leadership and management?

Schwartz: One really important point about how the brain works that has tremendous relevance to day-to-day business operations is what we commonly call the habit center. That part of the brain is the basal ganglia, towards the bottom or base of the brain. This is a part of the brain that we share with reptiles and with birds, and it operates in a human being very similarly to a reptile, a bird and a rodent. That’s one of the reasons why it has been studied so intensively scientifically.

“Habits come up anytime you’re under stress, which in business is all the time.” –Jeffrey Schwartz

But here’s the key point: Habits happen automatically, and that can be tremendously advantageous. But they happen largely without your awareness. So, habits come up anytime you’re under stress, which in business is all the time. Because habits happen very largely under the conscious level, and they tend to take over under stress, one of the things we want to use the executive brain to do is make choices and become conscious of what our habits are getting us to do and to be able to inhibit them, which takes a lot of brain energy when it’s appropriate. We want to change the habit. That is one of the big points of how understanding how the brain works directly informs how to run a business.

Knowledge@Wharton: Is there a connection between habits that form in the business realm and in our personal lives?

Schwartz: There’s a huge amount of crossover, and that brings in the whole personal element in being a great leader, which is very, very big. We never want to demean or undermine the critical importance of transactional leadership. If you’re not pleasing your customers, you don’t have a business. However, we do want to get beyond that.

The way the brain works, you can become an extremely good transactional organization just on habit alone. But what happens then is that the business is not adaptive enough. To become more adaptive to constantly changing circumstances, you need this executive function, you need this planning, and you need this capacity to make choices to inhibit the habits that are no longer serving your function anymore.

That’s where strategic leadership really comes in. Transactional is necessary, but it has to be modified over time and adapted by strategic leadership executive principles.

Kleiner: Fortunately, you get a chance to practice that every time you make a decision. Let’s say I have a difficult personnel decision. I’ve got somebody who’s not performing. I want to make that person happy, but I also have to make all the other people who are covering for that person happy, and I have to make my boss happy. And I start thinking about how I’m going to be happy. I take a sick day, and then I come back and I do the expedient thing, which might be giving a poor performance review or setting in motion things [that would lead to a firing].

But I haven’t really thought about what the situation calls for. I haven’t really thought about how this person fits in, what their long-term trajectory is, what contribution they’re making, what it would cost to replace them and what this person is thinking. Why are they doing the things they’re doing? Why are the people around them not giving that person the support they need? Why am I reacting the way I’m reacting?

If I stop and look at my own thoughts and re-label them not just as reality but as my own reactions to this — if I come up with a storyline that helps me understand the various people and the relationships between them — then I’m much more equipped to say, “What does this situation really need? What do we all need to do differently, and how do we all need to think differently?”

When I do that once, and I do it successfully, that’s great. If I do that time and time again, then I’m building the habit of doing it. I’m changing the way my neural patterns work, making it easier for me to pick up this habit in the future. Sooner or later, I become that kind of presence in the organization around me.

“In a time of challenge, you need to find ways to move your organization past its threshold, past its limits, to do things that you and your colleagues couldn’t do before. ” –Art Kleiner

Schwartz: A term that has become very popular in social neuroscience in the last decade is mentalizing, which simply means thinking about what other people are thinking, thinking about what they’re going to do. This is in contradistinction and in addition to thinking about what they want, which is the cardinal part of transactional leadership.

Transactional leadership is largely about thinking about what people want. Obviously, satisfying your customer is critical, thinking about what they want. However, we want to go beyond that. At the strategic level — the transition from what we call the “low ground” to the “high ground” — we use mentalizing to start thinking about what they’re thinking, so you can understand why they want what they want.

It’s really thinking about what people are going to do, then re-labeling our own responses to that and thinking about how customers, how colleagues, how superiors think about what’s going on, what they’re going to do. We can use that in our pattern of labeling our own responses to become more mindful, become more aware, have the “wise advocate.” Because the wise advocate is our inner guide that we create an inner constructive narrative in consultation with. That’s how you integrate executive function with mindfulness.

Knowledge@Wharton: Will mixing all those qualities put managers on a path for success for themselves and the company?

Kleiner: The way I think of it is that you have this inner voice. We call it the ‘inner voice to strategic leadership.’ You’re listening to your own internal wise advocate. You take on that voice in the organization around you, and that gives you confidence because you know what you’re doing, which is always what leaders in any organization want to do. You’re not just playing the game of ‘getting what I want.’ You’re playing the game of making the world a better place, helping your organization thrive for the next 10 years instead of the next six months or the next quarter, really figuring out what your career needs to be, what the people around you need to be.

You’re building the capacity to tackle those larger issues that you never seem to have time for on a purely transactional basis. So, you get stronger. As you get stronger, you get better. We’re not talking about this happening the day after tomorrow. You know people who have grown in the job, and this is typically the way they’ve done it — even if they don’t call it what we call it.

Schwartz: Art brings up another extremely important point: the word ‘confidence.’ It’s really the integrative term between personal neuroscience and using this model in applied business leadership principles. By creating that constructive narrative and inner dialogue with the wise advocate, which is that mindful voice inside of you, you can have not just a goal but a narrative about why you’re pursuing that goal and a sense of how you are participating in this plan going forward. That gives you the confidence to make decisions, and the sense of firmness and the sense of assertiveness that is so critical to leadership.

Knowledge@Wharton: You write in the book, “The focus of your attention determines what happens in the mind and the brain during these critical moments of choice and determines what kind of a leader you’re going to be.” Can you explain?

Schwartz: Yes, that builds on my work of 40 years at UCLA, and that really builds on the whole background of my work with people with obsessive-compulsive disorder. People with obsessive-compulsive disorder have a genetically inherited brain issue that is giving them very destructive, intrusive, bothersome thoughts.

It was teaching those people to use mindfulness, to use what we have now come to call the “wise advocate,” to redirect their attention away from those destructive, deceptive brain messages, and then using brain-imaging technology to discover that they could change their brain by changing the focus of their attention.

That is huge. That’s why we say the power is in the focus, because by focusing your attention differently, you rewire your brain. It was called “self-directed neuroplasticity,” a term that I coined in my book, The Mind and the Brain.

Knowledge@Wharton: Art, how did working on this book get you thinking about your own leadership skills?

Kleiner: I was at Booz Allen Hamilton, which was a 20,000-person firm, and then we spun off a 3,000-person firm, Booz & Company.… Then we were acquired by PwC, which is about 240,000 people or more around the world. In each case, the question of who am I as an individual versus what role I play in the larger organization was critically important.

I was constantly calibrating. Just one example: I’m an editor, and I was working with a group of editors. Sometimes it was not an editorial organization, so people sometimes didn’t always understand what editors do. I found myself using the phrase, “insouciant savoir faire.”

In other words, we’re not going to get anxious, we’re going to assume that we know what we’re doing — the savoir faire part — and as long as we know what we’re doing, we can afford to be insouciant because we can stand in our confidence.

That became something that I and a few other people kind of did on a day-to-day basis, and that changed our habits. It allowed us to think about what the organization needed to publish, and therefore we could work towards that end.

“The power is in the focus, because by focusing your attention differently, you rewire your brain.” –Jeffrey Schwartz

Knowledge@Wharton: Jeffrey, you talked earlier about the difference between low ground and high ground in decision-making. Can you take us deeper into that?

Schwartz: That is the critical distinction that we are making in the book. Principle No. 1 is, the key word to understand about the low ground is expedient decision-making. I want to stress we are not disparaging that. Expedient decision-making is taking into account questions framed around, what do I want? What does the other person want?

Ideally, in that kind of understanding, we’re trying to get to the win-win perspective. We never criticize it, but we do want to go beyond it into what we call strategic leadership, which brings in those key terms I mentioned already — mentalizing, executive function, and what we call applied mindfulness.

One way of understanding what applied mindfulness means — and I think one of the cardinal advances in our book — is a business-related application to mean mentalizing about yourself. You really get in touch with your wise advocate and start to think about, what am I thinking? What am I going to do and why? That is real mindfulness, and we like to call it ‘applied mindfulness.’

Then you use your executive function — your planning, your goal orientation, your capacity to inhibit responses — because a lot of the advances in executive function come from inhibiting no-longer adaptive prior responses that have been wired into your habits. A lot of it is about changing habits. You can see how there is an integration between transactional and strategic leadership, and that’s what the book is about.

Knowledge@Wharton: Do you think business leaders understand this? They have more on their plate than ever before. Some of these elements may be the things that fall through the cracks.

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Kleiner: I think most leaders know that they’re missing something, right? And most leaders make it work most of the time. In fact, I think a lot of leaders have gotten where they are by consulting their wise advocate or their inner voice quite a lot of the time, but not all the time.

We tell stories in our book about people like Aetna’s CEO Mark Bertolini, who raised the salary of the lowest-paid people in the organization in a very publicly renowned way, partly because he started thinking about what all the people in the organization were thinking. He took it to the first phase of doing it himself, but then he had to take it through the organization.

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Organizations make it hard to live this way. Organizations have deceptive messages. “It must be flawless, or it’s worthless.” “We’re not effective, and we never will be.” Or, “We can do anything we want.” There are all sorts of deceptive messages that are unexamined, and they make it hard to really stand up and be the kind of leader we need to be right now — unless we know how to do it.